2016 (9) TMI 1113 - AT - Central Excise

Imposition of penalty - Rule 25 of Central Excise Rules, 2004 - contravention of Rule 8(3A) of the Central Excise Rules, 2004 - duty liability for the month of July, 2010 and August 2010 were paid with delay ie. beyond the period of 30 days - acute financial constraints - Held that - in view of the judgment of Hon ble High Court of Gujarat in the case of Indsur Global Ltd Vs UOI 2014 (12) TMI 585 - GUJARAT HIGH COURT which has struck down the said Rule 8(3A) as unconstitutional, the imposition of penalty for contravention of the said rule will not lie. Therefore, the impugned order to this extent is not sustainable. - Decided in favour of appellant

Summary

Issues Involved:
Imposition of penalty under Rule 25 of Central Excise Rules, 2004 for contravention of Rule 8(3A) of the same rules.

Analysis:
The judgment dealt with the imposition of a penalty under Rule 25 of the Central Excise Rules, 2004 for contravention of Rule 8(3A). The appellants, who were manufacturers of RBE panel boards, faced a penalty for delayed duty payment due to financial constraints. The Commissioner (Appeals) had upheld the penalty, albeit reducing the amount. The appellants contested this penalty, citing a judgment of the High Court of Gujarat that had declared Rule 8(3A) unconstitutional. The appellants argued that since the rule was unconstitutional, no penalty should be imposed. The tribunal agreed with this argument and set aside the penalty under Rule 25(1) of the Central Excise Rules, allowing the appeal with consequential reliefs.

In this case, the core issue was the imposition of a penalty under Rule 25 of the Central Excise Rules for contravention of Rule 8(3A). The appellants had faced financial difficulties leading to delayed duty payments, which triggered the penalty. However, they argued that the penalty should not apply as the High Court of Gujarat had deemed Rule 8(3A) unconstitutional. The tribunal agreed with this argument, setting aside the penalty imposed under Rule 25(1) of the Central Excise Rules.

The judgment highlighted the appellants' contention that the delay in duty payment was solely due to financial constraints, not an intention to evade payment. Despite the Commissioner (Appeals) upholding the penalty, the appellants successfully challenged it based on the unconstitutionality of Rule 8(3A) as per the High Court of Gujarat's judgment. As a result, the tribunal set aside the penalty under Rule 25(1) of the Central Excise Rules, allowing the appeal with any consequential reliefs.

Overall, the judgment revolved around the imposition of a penalty under Rule 25 of the Central Excise Rules for contravention of Rule 8(3A) due to delayed duty payments by the appellants. The tribunal, considering the unconstitutionality of Rule 8(3A) as per a previous High Court judgment, ruled in favor of the appellants, setting aside the penalty and allowing the appeal with any necessary consequential reliefs.